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Utilising Agent-Based Modelling and Simulation System-Driven Price Optimisation to Enhance Enterprise Performance

In: The Palgrave Handbook of Breakthrough Technologies in Contemporary Organisations

Author

Listed:
  • Hasan Beyari

    (Umm Al-Qura University)

  • Othman Alrusaini

    (Umm Al-Qura University)

Abstract

The general observation is that lowering the price of one firm in a duopoly arrangement causes price-sensitive customers to migrate to the other firm, which may result in increased profits for the firm that lowers the price. To validate this claim, we conducted simulation research with two electric car manufacturers and agent-based modelling. At first, the baseline was established. We performed 1000 simulations and agent-based modelling, assuming that business 1 would cut its price by a maximum of 20%. This would result in a maximum of 40% of manufacturer 2's price-sensitive consumers switching to business 1. The results of 1000 simulations and agent-based modelling revealed that price reductions by manufacturer 1 increased its clients, probably due to the switchover from manufacturer 2, and that revenues from two of the sales routes increased dramatically. This study has ramifications for businesses seeking to lure price-sensitive clients away from a competitor.

Suggested Citation

  • Hasan Beyari & Othman Alrusaini, 2025. "Utilising Agent-Based Modelling and Simulation System-Driven Price Optimisation to Enhance Enterprise Performance," Springer Books, in: Mahmoud Moussa & Adela McMurray (ed.), The Palgrave Handbook of Breakthrough Technologies in Contemporary Organisations, chapter 0, pages 305-315, Springer.
    • Handle: RePEc:spr:sprchp:978-981-96-2516-1_24
    DOI: 10.1007/978-981-96-2516-1_24
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